Traffic Control Technology Co., Ltd.'s (SHSE:688015) stock price dropped 12% last week; individual investors would not be happy

Key Insights

• The considerable ownership by individual investors in Traffic Control Technology indicates that they collectively have a greater say in management and business strategy
• A total of 6 investors have a majority stake in the company with 54% ownership
• 22% of Traffic Control Technology is held by insiders

Every investor in Traffic Control Technology Co., Ltd. (SHSE:688015) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 35% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥3.5b last week, individual investors would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Traffic Control Technology, beginning with the chart below.

View our latest analysis for Traffic Control Technology

What Does The Institutional Ownership Tell Us About Traffic Control Technology?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Traffic Control Technology does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Traffic Control Technology's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Traffic Control Technology. Looking at our data, we can see that the largest shareholder is Beijing Infrastructure Investment Co.,Ltd. with 17% of shares outstanding. Chunhai Gao is the second largest shareholder owning 9.6% of common stock, and Beijing Jiaotong University Assets Management Co., Ltd. holds about 9.3% of the company stock. Chunhai Gao, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Traffic Control Technology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Traffic Control Technology Co., Ltd.. It has a market capitalization of just CN¥3.5b, and insiders have CN¥777m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 35% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 5.6%, private equity firms could influence the Traffic Control Technology board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

Our data indicates that Private Companies hold 26%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

We can see that public companies hold 6.1% of the Traffic Control Technology shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Traffic Control Technology you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.